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This is a very weird blame shift. At 250k/account insured suddenly it's a CEOs fiduciary incompetence that a seed round isn't distributed amongst 16 banks?

tome 4y ago
Or just put into T-Bills, which private individuals can do from their phones.
- sseagull 4y ago
  Or pay someone/some company to do it. You pay for AWS because you don’t feel like managing hardware, why just assume you can manage 10s of millions of dollars?
- brigadier132 4y ago
  Except people that owned T-Bills that they bought through SVB also lost access to their money. Should they buy the T-Bills and hold the actual certificates under their mattress?
  - tome 4y ago
    > Except people that owned T-Bills that they bought through SVB also lost access to their money. I don't think that's the case, though I may be wrong and would appreciate correction if so. Anyone who held T-Bills at SVB as a broker should have been able to transfer them to another broker at no loss (but at a small delay), and the remaining $250k in their checking account should have been available within one business day.
threeseed 4y ago
No whether you have $1 in the bank or $100 million is irrelevant. Your job is to understand and mitigate financial risk as is required by law. And in this case there are many options for managing this risk other than splitting it up manually into multiple bank accounts. Speaking with a financial advisor would help with this.
- eloff 4y ago
  There’s so much victim blaming in this comments section. I’m amazed.
  - threeseed 4y ago
    The real victims in all of this are the taxpayers who will cover the costs. CEOs who should have known better are not victims.
    - eloff 4y ago
      Taxpayers are not covering any cost. The banks will pay for it via potentially higher FDIC insurance premiums. It’s possible they pass that on to customers, but there’s no direct link here.
sealeck 4y ago
Um, yes? If you have several million dollars of deposits you should absolutely split them among a series of banks as well as money market funds. This is why you need to find a competent banker who can give you sound financial advice.
SaintGhurka 4y ago
You don't need 16 banks to eliminate all risk. You need one bank and a treasurydirect account. Anybody, including corporations and partnerships, can safely park excess cash at treasurydirect.gov. Buy short term treasuries and time the redemptions to coincide with next month's payrolls. The shortest bills are 4 weeks and they're paying like 4% right now. I honestly don't understand why more people don't do it.
- justin66 4y ago
  Treasurydirect is great and everything you say is true, but the poor user experience and the commonly reported difficulty involved in getting help if there is a problem make it more appropriate for personal finance than business, I would think. More generally the approach of using a cash sweep account in conjunction with t-bills held with a custodian bank seems like pretty sane advice. I don't think I'd emphasize "one bank," but otherwise, sure.
seligerasmus 4y ago
lol @ the hackernews commentariat learning that the ideal CEO isn't just some ascendant version of a rockstar coder that makes gantt charts. > suddenly it's a CEOs fiduciary incompetence that a seed round isn't distributed amongst 16 banks Yes. There's no "suddenly" to it - you're describing well-established fiduciary responsibilities. A CEO's responsibility is to delegate those tasks to someone like a CFO, who _absolutely should_ incorporate a strategy that balances liquidity with stability. The CFO also has a responsibility to see just what, exactly, a bank is doing with their deposits and make a determination about the associated risk. And yes, it is very normal to park money in various accounts and instruments as part of that strategy. It is deeply distressing that half the comments here and abroad think this is some absurd, unattainable standard instead of the operative norm for the other 90% of the economy that doesn't get treated like a miracle baby for simply existing. You're not running a lemonade stand, and witnessing self-anointed "innovators" screech for a bailout because they somehow accrued millions of dollars in investments without ever learning about private deposit insurance or Cash Sweep or T-bills goes a long way to explaining why the majority of these goofs fashioned their Twitter bios into graveyards for failed ventures.
- nkozyra 4y ago
  Look, I get that in hindsight the "of course you should do this thing that historically you would never think of" thing makes sense, but my bigger point was the blame shifting. Sub-20 person startup CEOs didn't cause this problem. Saying "this is YOUR fault, person who just got their first seed round" seems to gloss over the large(r) issues.
wil421 4y ago
No it’s the CEOs job to hire people who know like a CFO and everyone else in finance. Lots of companies make short investments with extra cash. No need to put everything in a single bank account.
- dlubarov 4y ago
  Why would we want a situation where everyone splits up their cash into $250k accounts? Seems like that would waste a lot of time while removing competition (who cares what the bank is, any bank is fine for $250k). And it wouldn't ultimately save taxpayers any money, it's just a strategy for gaming the current FDIC guarantee.
  - peanuty1 4y ago
    You don't need to limit your accounts to a maximum of $250k. You just need to use more than one bank if you're going to use a regional bank like SVB. Especially a regional bank like SVB that fought hard against regulation, caters specifically to herd-thinking VCs and startups, offered 4.5% APY, and went all in on mortgage backed securities shortly before the Fed hiked rates way up.
jacquesm 4y ago
> suddenly it's a CEOs fiduciary incompetence that a seed round isn't distributed amongst 16 banks? That's not your only option and this is nothing new. Even I - arguably a very small business owner - spread my risk. Just in case...
fzeroracer 4y ago
So what exactly is a CEOs responsibility then? I feel like people are increasingly just removing any and all blame from CEOs for mismanaging their companies. Why should they even exist if they have zero responsibilities?
- chromanoid 4y ago
  Idea guy? ;)

tome 4y ago

Or just put into T-Bills, which private individuals can do from their phones.

sseagull 4y ago
Or pay someone/some company to do it. You pay for AWS because you don’t feel like managing hardware, why just assume you can manage 10s of millions of dollars?
brigadier132 4y ago
Except people that owned T-Bills that they bought through SVB also lost access to their money. Should they buy the T-Bills and hold the actual certificates under their mattress?
- tome 4y ago
  > Except people that owned T-Bills that they bought through SVB also lost access to their money. I don't think that's the case, though I may be wrong and would appreciate correction if so. Anyone who held T-Bills at SVB as a broker should have been able to transfer them to another broker at no loss (but at a small delay), and the remaining $250k in their checking account should have been available within one business day.

threeseed 4y ago

No whether you have $1 in the bank or $100 million is irrelevant. Your job is to understand and mitigate financial risk as is required by law. And in this case there are many options for managing this risk other than splitting it up manually into multiple bank accounts. Speaking with a financial advisor would help with this.

eloff 4y ago
There’s so much victim blaming in this comments section. I’m amazed.
- threeseed 4y ago
  The real victims in all of this are the taxpayers who will cover the costs. CEOs who should have known better are not victims.
  - eloff 4y ago
    Taxpayers are not covering any cost. The banks will pay for it via potentially higher FDIC insurance premiums. It’s possible they pass that on to customers, but there’s no direct link here.

sealeck 4y ago

Um, yes? If you have several million dollars of deposits you should absolutely split them among a series of banks as well as money market funds. This is why you need to find a competent banker who can give you sound financial advice.

SaintGhurka 4y ago

You don't need 16 banks to eliminate all risk. You need one bank and a treasurydirect account. Anybody, including corporations and partnerships, can safely park excess cash at treasurydirect.gov. Buy short term treasuries and time the redemptions to coincide with next month's payrolls. The shortest bills are 4 weeks and they're paying like 4% right now. I honestly don't understand why more people don't do it.

justin66 4y ago
Treasurydirect is great and everything you say is true, but the poor user experience and the commonly reported difficulty involved in getting help if there is a problem make it more appropriate for personal finance than business, I would think. More generally the approach of using a cash sweep account in conjunction with t-bills held with a custodian bank seems like pretty sane advice. I don't think I'd emphasize "one bank," but otherwise, sure.

seligerasmus 4y ago

lol @ the hackernews commentariat learning that the ideal CEO isn't just some ascendant version of a rockstar coder that makes gantt charts. > suddenly it's a CEOs fiduciary incompetence that a seed round isn't distributed amongst 16 banks Yes. There's no "suddenly" to it - you're describing well-established fiduciary responsibilities. A CEO's responsibility is to delegate those tasks to someone like a CFO, who _absolutely should_ incorporate a strategy that balances liquidity with stability. The CFO also has a responsibility to see just what, exactly, a bank is doing with their deposits and make a determination about the associated risk. And yes, it is very normal to park money in various accounts and instruments as part of that strategy. It is deeply distressing that half the comments here and abroad think this is some absurd, unattainable standard instead of the operative norm for the other 90% of the economy that doesn't get treated like a miracle baby for simply existing. You're not running a lemonade stand, and witnessing self-anointed "innovators" screech for a bailout because they somehow accrued millions of dollars in investments without ever learning about private deposit insurance or Cash Sweep or T-bills goes a long way to explaining why the majority of these goofs fashioned their Twitter bios into graveyards for failed ventures.

nkozyra 4y ago
Look, I get that in hindsight the "of course you should do this thing that historically you would never think of" thing makes sense, but my bigger point was the blame shifting. Sub-20 person startup CEOs didn't cause this problem. Saying "this is YOUR fault, person who just got their first seed round" seems to gloss over the large(r) issues.

wil421 4y ago

No it’s the CEOs job to hire people who know like a CFO and everyone else in finance. Lots of companies make short investments with extra cash. No need to put everything in a single bank account.

dlubarov 4y ago
Why would we want a situation where everyone splits up their cash into $250k accounts? Seems like that would waste a lot of time while removing competition (who cares what the bank is, any bank is fine for $250k). And it wouldn't ultimately save taxpayers any money, it's just a strategy for gaming the current FDIC guarantee.
- peanuty1 4y ago
  You don't need to limit your accounts to a maximum of $250k. You just need to use more than one bank if you're going to use a regional bank like SVB. Especially a regional bank like SVB that fought hard against regulation, caters specifically to herd-thinking VCs and startups, offered 4.5% APY, and went all in on mortgage backed securities shortly before the Fed hiked rates way up.

jacquesm 4y ago

> suddenly it's a CEOs fiduciary incompetence that a seed round isn't distributed amongst 16 banks? That's not your only option and this is nothing new. Even I - arguably a very small business owner - spread my risk. Just in case...

fzeroracer 4y ago

So what exactly is a CEOs responsibility then? I feel like people are increasingly just removing any and all blame from CEOs for mismanaging their companies. Why should they even exist if they have zero responsibilities?

chromanoid 4y ago
Idea guy? ;)